FHA Loans are mortgage loans that are government-insured mortgage loans by the Federal Housing Administration (FHA). FHA is a government agency that was created in 1934 to improve housing standards and promote homeownership. FHA mortgage insurance makes the loans less risky for the lenders that underwrite and fund these mortgage loans. Because they are less risky, borrowers who get FHA loans can get lower rates (better terms) than a conventional mortgage loan can offer). Because of this guarantee of the loan by the government, it also allows for less strict loan guidelines than a conventional loan requires.
Why an FHA Loan
FHA mortgage loans offer flexible loan guidelines
Low-Interest Rates – FHA Loans can offer lower rates compared to non-FHA mortgage loan products
Because FHA loans are insured by HUD () allow for lower interest rates than conventional mortgage loans do because they are insured by The Federal Housing Administration.
Low Down Payment Options
Down payments have a minimum down payment of 3.5% of the purchase price.
Credit challenges in the past
FHA Loans allow for Lower credit scores than conventional loans do.
The wait time for having had a bankruptcy is two (2) years from the date of discharge
The wait time for having had a Foreclosure is Three (3) years from the date of recording of the sale or the lender (bank) taking back the property.
MI (Mortgage Insurance)
FHA Mortgage Loans have mortgage Insurance.
There are two types of mortgage insurance on FHA Loans: 1) Upfront mortgage insurance & 2) Monthly mortgage insurance.
The upfront mortgage insurance is typically included in the loan amount at closing & the 2nd is monthly, which is paid each month through your escrow account, which a part of your monthly mortgage payment.
The reason for mortgage insurance is in place in case a borrower defaults and the home is foreclosed on. The Federal Housing Administration pays funds from the mortgage insurance pool of funds to the bank that owns the loan for losses on the loan that are incurred. In short, it is a way to mitigate the risk for the banks, FHA & HUD in exchange for a low down payment and less restrictive guidelines to get a loan. It’s a give-and-take relationship to own a home.
Why Us for an FHA Loan?
We have more flexibility in loan options with better pricing options because we work with wholesale lenders.
There are several FHA mortgage loan options, including (*terms subject to change):
- FHA Purchase loans – If you are buying a home, your down payment can be as low as 3.5% of the price of the home. Seller concessions are allowed up to 6% of the purchase price.
- FHA 203-K Loans – Rehab money for FHA loans to improve a property
- FHA Refinance – Refinance up to 97.75% of your home value. Cash-out refinances are up to 80% LTV.
- FHA Cash-Out Refinance up to 80% of the appraised value of the home.
- Debt Consolidation – Credit cards, personal loans, car payments, 2nd liens, and other debt – Your single, consolidated payment may be much lower than the total amount of individual payments you are making now.
- FHA Streamline Refinance – Do you already have an FHA loan? If so, you may qualify for refinancing with a lower rate and lower monthly payment. Best of all, there is very little paperwork involved and no new home appraisal is required.
Whether you are buying or refinancing a home and are in need of an FHA home loan, as a mortgage broker we have FHA pricing that is amongst the most competitive in the country and we work with multiple lenders that offer flexible FHA loan guidelines.